Structuring Equity Compensation for Partnerships and LLCs

Navigating Capital and Profits Interests Plus Section 409A and Tax Consequences

Recording of a 90-minute CLE/CPE webinar with Q&A


Conducted on Tuesday, February 14, 2017
Recorded event now available


This CLE/CPE webinar will provide employee benefits counsel with an overview of the types of equity compensation arrangements available to partnerships and LLCs. The panel will discuss tax consequences, advantages and disadvantages, design and structuring, and implementation considerations.

Description

Several alternatives are available to partnerships and LLCs for providing equity compensation to their employees, including granting profits interests, capital interests, and options to acquire such interests.

Partnership and LLC equity compensation arrangements present executive compensation counsel with complex design and structuring challenges, unlike corporate equity compensation, which is relatively straightforward.

IRS guidance is lacking on a number of important issues, including whether a partner/member can be an employee for tax purposes, how Section 409A applies, and when 83(b) elections should be made.

Listen as our authoritative panel offers solutions and strategic approaches for structuring equity compensation for partnerships and LLCs and for avoiding common pitfalls that can lead to disastrous tax consequences.

Outline

  1. Equity compensation alternatives available to partnerships and LLCs
    1. Profits interests
    2. Capital interests
    3. Options to acquire capital or profits interests
    4. Phantom arrangements
    5. Income tax consequences/advantages/disadvantages
  2. Design, structuring and implementation considerations
    1. Section 83(b) elections
    2. Capital account book-ups and valuation
    3. Section 409A considerations
    4. Impact of fee waiver proposed regulations
    5. Effect of partner/member status on being employee
    6. Effect of partner/member status on employee benefits
    7. Conversion to C corporation

Benefits

The panel will review these and other key issues:

  • How does a capital interest differ from a profit interest and what tax ramifications result from the type of equity interest granted?
  • How does Section 409A apply to equity interests in LLCs?
  • Should a Section 83(b) election be made for unvested interests?
  • Can a partner or LLC member receiving an equity interest also be an employee of the entity?

Learning Objectives

After completing this course, you will be able to:

  • Distinguish the economic and tax differences between capital interests and profits interests
  • Recognize the tax consequences associated with different types of partnership and LLC equity interests
  • Determine how Section 409A applies to partnership and LLC equity interests and when and whether a Section 83(b) election should be filed
  • Ascertain tools to evaluate the impact of granting a partnership or LLC interest to an employee and possible structuring alternatives relating to dual-status issues

Faculty

Edward E. Bintz, Partner
Arnold & Porter, Washington, D.C.

Mr. Bintz specializes in employee benefits and executive compensation. He represents clients on a broad range of compensation and benefits matters, including executive compensation programs, the compensation and benefits aspects of merger and acquisition transactions, plan terminations, ERISA’s fiduciary duty and prohibited transaction rules, and benefit plan controversies.

Brian J. O'Connor, Partner
Venable, Baltimore

Mr. O'Connor co-chairs the firm's Tax and Wealth Planning Group and provides tax advice to partnerships and to public and closely held businesses and their owners. Before coming to Venable, he worked as attorney-advisor with the IRS Office of Chief Counsel, assigned to projects and guidance involving partnerships and S corporations.


EA Credit

Enrolled Agent credit processing is available for an additional fee per person.

EA Processing $5.00


Recordings

CLE On-Demand - Streaming Video

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On-demand is the only recorded format recognized for CLE credits in DE, IN, KS, LA, MS, NC, OH, OK, SC, TN, VA, WI.

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*Only available for attorneys admitted for more than two years. For OH CLE credits, only programs recorded within the current calendar year are eligible - contact the CLE department for verification.

**NH attendees must self-determine if a program is eligible for credit and self-report their attendance.

CLE On-Demand Video $297.00
Available 48 hours after the live event

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Recorded Event

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AK, AZ, CA, CO, CT, FL, GA, HI, IA, ID, IL, KY, ME, MN, MO, MT, ND, NJ, NM, NY, OR, PA, TN, TX, UT, VT, WA, WV, WY (Note: Some states restrict CLE eligibility based on the age of a program. Refer to our state CLE Map for additional information.)

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Program Materials

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Program Materials

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Customer Reviews

The seminar reinforced information and explained issues in a clear manner without being either too elementary or too technical.

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SC&H Group

I appreciated that the seminar’s comprehensive coverage was targeted to those not already expert in this area of law.

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Gleaves Swearingen

I appreciated the speakers' extensive knowledge on the subject.

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Meyer, Unkovic & Scott

The best seminar I have attended on this topic! The speakers did an outstanding job making the topic understandable. 

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The speakers possessed great technical knowledge and experience.

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Frederic Dorwart, Lawyers

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Employment & ERISA Advisory Board

Susan E. Bernstein

Special Counsel

Schulte Roth & Zabel

Judith (Jude) Biggs

Partner

Holland & Hart

Joshua Davis

Director

Goulston & Storrs

Barbara E. Hoey

Partner

Kelley Drye

Jeffrey Hollingsworth

Partner

Perkins Coie

Diana L. Hoover

Partner

Hoover Kernell

Paul J. Kennedy

Shareholder

Littler Mendelson

Marcia Nelson Jackson

Partner

Wick Phillips

William C. Martucci

Partner

Shook Hardy & Bacon

Nancy Morrison O'Connor

Partner

Bracewell & Giuliani

Laura Foote Reiff

Shareholder

Greenberg Traurig

Eugene Scalia

Partner

Gibson Dunn & Crutcher

Peter Steinmeyer

Member

Epstein Becker & Green

Teresa R. Tracy

Partner

Freeman Freeman Smiley

Todd D. Wozniak

Shareholder

Greenberg Traurig

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